4 transactions

Greaves : An Analysis of Product Quality & Customer Satisfaction

4.1 EXECUTION OF REQUIREMENT

Customer

Inquiry Quotation Order Execution Via Dealer Order

Manufacturer

The customer forwards Inquiry as per his actual requirement and application.

The Dealer after consulting the manufacturer submits the most appropriate Quotation meeting all technical requirements of the customer.

Customer on scrutinizing, modifying & negotiating with the dealer places the order with definite terms & conditions.

The Dealer in turn places his order on manufacturer narrating all the requirements & commitments made by him to the customer.

Dealer

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The manufacturer processes the order placed & executes it via Dealer.

4.1.1 TRANSACTION

As the material is ready for dispatch , manufacturer has to pay Excise Duty1 to the Government & collect it from the Dealer @ 16% . In support of this manufacturer gives Excise Duty Gate Pass which in business language is more commonly known as EDGP. Dealer uses EDGP for collecting Excise Duty amount from the customer. Customer uses EDGP for claiming “CENVAT” from Government.

Over & above excise duty manufacturer is also charging Sales Tax either CST ( Central Sales Tax ) or GST (Gujarat Sales Tax) as required.

4.1.2 CENTRAL SALES TAX (CST) :

CST is applicable when the transaction takes place between two states. i.e. When Manufacturer & Dealer are stationed in Different States. Concessional rate of CST is @ 4% against C – FORM. Whenever a firm is started, for carrying out transactions between states the firm has to obtain CST NO. from the Sales Tax Department. The firm not registered with the Sales Tax Department has to pay full rate of tax i.e. 10% instead of Concessional rate of 4%.

4.1.3 C - FORM

C- FORM is a very special type of form which is issued only to the Sales Tax registered trader/ manufacturer & time to time a firm has to submit details about use of C- Form to Sales Tax department.

Customer Dealer Manufacturer

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C-FORM C- FORM

________________________________1EXCISE DUTY is the tax levied upon the manufacturer by the government.As per the new Budget for the year 2004-05 government has levied additional “cess” of 2% on Excise duty amount.

4.1.4 TRANSACTION FOR C-FORM

Manufacturer collects C- Form from Dealer, & Dealer collects C- Form from the ultimate Customer. In case if customer is not a registered Firm then Dealer has to charge the full rate of Tax i.e. 10%. In case if he fails to do so, then Dealer is responsible for paying the full rate of Tax to Government. Thus by carrying out transactions with C-Form our Government is exercising control over all transactions so there is no revenue loss to them.

4.1.5 LOCAL SALES TAX

It is applicable when the transaction takes place within the state i.e. When the manufacturer & Dealer both are stationed in the same state. In Gujarat it is known as Gujarat Sales Tax (GST)

The rate applicable for GST is different for different products. Concession for GST is given to agricultural products. The GST applicable on different products of GREAVES is as follows

PRODUCTS GST

Gensets 8%

Diesel Engine 4%

Gear Box 8%

Fluid Coupling 8%

All Construction Equipments

12%

Agricultural Pump Set

4%

Power Tiller 4%

Tractor 4%

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4.2 LORRY RECEIPT

Lorry Receipt more commonly known as LR is a Negotiable instrument & a proof given by approved & reliable Transporter to manufacturer in return of Material dispatched through them to various destinations. LR covers Name of

Consignor – Name of the Firm (Manufacturer) handing over the Material

Consignee – Name of Customer (Dealer & also final Customer) to whom the material is to be delivered.

LR also covers the destination where the material is to be taken, brief description of the material, approximate weight, freight amount & value.

4.2.1 LR TRANSACTION

Consignor when endorses LR in favor of Consignee, Consignee automatically becomes the owner of the material. Consignee – Dealer can then endorse again the same LR in favor of ultimate customer. Dealer at that time collects the payment in exchange of LR. This Transaction is known as “RR SALE2” in business language.

Manufacturer

Transporter Dealer Customer

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LR LR LR

For C- Form transactions only LR is traded or endorsed without taking delivery of the actual material by the Dealer. In case if the Dealer takes delivery of the material he is liable to pay the Local Sales Tax while delivering it to the ultimate customer.

_____________________________2RR SALE is Railway Receipt Sale, which is nothing but the sale of LR.

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